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October 16, 1992 By Mario F. Cattabiani, Marcia Gelbart and Craig R. McCoy INQUIRER STAFF WRITERS Museum hired yacht for Fumo The Independence Seaport Museum paid $10,000 in 2001 to lease the boat for the senator. He repaid the money this year. For several summers, State Sen. Vincent J. Fumo capped his vacations in Martha's Vineyard with cruises on a luxury yacht owned by a Philadelphia museum. But three years ago, the museum's 85-foot boat, the Enticer, was laid up for repairs. Fumo cruised anyway. Independence Seaport Museum, a nonprofit with Fumo on its board, leased an elegant yacht - Sweet Distraction - for the senator and paid for it with an estimated $10,000 of museum money. Fumo did not pay the museum back for the 2001 trip until this year, The Inquirer has learned. In recent months, the FBI has been looking into the cruises as part of a broad investigation into the powerful Philadelphia state senator's relationship with a series of nonprofits. Federal prosecutors have subpoenaed museum records about Fumo's use of its yachts and interviewed the Florida firm that charters out the museum's vessels. The museum's chairman has called Fumo - a board member for two decades - its "largest single contributor of public funds," referring to government grants that the senator has helped it obtain. H. Art Taylor, president of a national watchdog group that monitors charities, said nonprofits must go out of their way to avoid any appearance that insiders are receiving personal benefits. Taylor said, explaining his group's general policy, "we encourage boards of organizations to be free of conflicts and self dealings." According to law experts, Fumo's use of the Sweet Distraction might pose a legal problem if the cruise was not related to museum business and he had no initial intent to repay the museum. Fumo's lawyer, Richard A. Sprague, said in a statement last week, "For your information, the senator paid for the ship personally." Sprague dismissed the issue of Fumo's cruise as "drivel," and asked the newspaper, "Isn't it time you stopped harassing the senator?" Sprague declined to answer other written questions, such as when Fumo reimbursed the museum. The senator also declined to be interviewed. Independence Seaport is represented by Geoffrey R. Johnson of Sprague's Philadelphia firm. Johnson did not respond to questions last week about Sweet Distraction. In a recent interview with the Harrisburg Patriot-News, Fumo said he wasn't worried about the FBI inquiry into his use of the yachts. Fumo said Sprague and a team of tax experts can prove that Fumo broke no laws, the newspaper reported. Previously, museum officials have said that Fumo and other board members were permitted free use of its yachts if they were wooing donors or otherwise helping the museum grow. The Enticer normally rents for as much as $22,000 a week. The museum chartered the 80-foot Sweet Distraction at a time when the Enticer was unavailable for cruises. Between the fall of 2000 and the fall of 2002, the Enticer was undergoing renovations at a Maine shipyard. The museum was also facing financial difficulties during that period. Its endowment has fallen dramatically in recent years, as the museum has drawn against it and as the value of its stock portfolio has dropped. The museum cut its workforce by a third in 2002. Investments in luxury motor yachts have exacerbated the troubles. Even with a substantial gift toward its upkeep, the museum has lost at least $2.5 million repairing and operating the Enticer since it was donated to the museum in 1995, documents show. The museum has sought to defray the Enticer's cost by leasing it to private renters. The boat, and a predecessor called the Principia, have also been used by Fumo during some summer vacations, according to interviews with people who have joined Fumo on the boat. The museum found a substitute for Fumo in 2001 while the Enticer was laid up. Museum officials turned to Priscilla Yacht Management, of Fort Lauderdale, Fla. Priscilla, the museum's booking agent for Enticer, made arrangements with the owner of Sweet Distraction, a Long Island businessman. Fumo and five adult companions cruised for three days on Sweet Distraction, according to its captain, Fredrick E. Hammond. Among those who joined Fumo were a longtime State Senate aide, Ruth Arnao, and her husband, Mitchell Rubin, chairman of the Pennsylvania Turnpike Commission, according to someone familiar with the cruise. Arnao also directs Citizens Alliance for Better Neighborhoods, a nonprofit community-betterment group in South Philadelphia. News of the FBI investigation into Fumo's activities surfaced after The Inquirer disclosed that the state senator had cut secret deals with Peco Energy under which Peco donated $17 million to Citizens Alliance. In those deals, in 1998 and again in 2000, Fumo agreed to drop legal challenges to the power company in return for concessions by Peco, including rate reductions. In early March, Arnao, who has worked for Fumo for two decades, went on unpaid leave from her $95,216-a-year job as deputy chief of staff. No reason was given, said Russ Faber, chief clerk of the State Senate. Attempts to reach Arnao were unsuccessful. Rubin has been a close Fumo ally for years. "What I do in my personal vacations is my business," Rubin said when asked about the 2001 cruise. "I'm not making any comment on that trip." In a recent interview, the owner of Sweet Distraction at the time of Fumo's cruise said he couldn't say for sure how much the museum had paid to charter the boat because he didn't have the information readily available. But the former owner, who asked not to be identified, said users of his boat typically pay about $10,000 for three days. * Worth at least $1 million, Sweet Distraction boasts three cabins, including a master stateroom with a king-size bed, walk-in cedar closet, and satellite TV. According to Hammond, who captained the yacht at the time, he and his wife, Julianne, who formed the crew of Sweet Distraction, picked up Fumo and his companions in late July or early August 2001 in Martha's Vineyard. They then cruised the waters between Martha's Vineyard and Nantucket. "They were just out having fun," Hammond said. "They were just out to play." At the end of the trip, Sweet Distraction docked in Nantucket so Fumo and his group could catch a plane to Philadelphia, Hammond said. One thing about Fumo stuck in Hammond's mind: Fumo was a news junkie and insisted on watching TV before bed. At one point, Fumo grew upset when the boat's satellite was blocked by a larger yacht while docked in Nantucket. "He wasn't happy," recalled Hammond. In a March radio interview, Fumo was asked whether he paid to use the museum's yachts. "It depends on the circumstances," he replied. "Now, I'm not going to get too much further into that - what I do with my private money and what I do with my private life." The museum's director, John S. Carter, has said that board members could cruise free provided they were engaged in museum business. As an example of a trip involving museum business, Carter said that he cruised with Fumo and that the trip gave Carter "personal time with him to lobby for funding." Carter also cited a trip Fumo took with Comcast executive David L. Cohen and their families, pointing out that Cohen later joined the museum board. Cohen characterized the cruise as a "social one." Carter spoke in May about the yachts in a memo to his board members and a statement to The Inquirer. In neither did he mention that the museum had chartered a boat for Fumo. * The fact that Fumo reimbursed the museum might not in itself end federal scrutiny of the 2001 cruise, according to Jacob S. Frenkel, a former attorney with the Securities and Exchange Commission, and Douglas C. McNabb, a Houston defense lawyer and expert on white-collar crime investigation. Michael Sklaire, a former assistant U.S. attorney, said prosecutors have to weigh difficult issues of motivation. "In federal law, the key is intent: What was the intent of the party receiving the benefit? What was the intent of the party giving the benefit?," Sklaire said. Nonprofits Fumo has aided State Sen. Vincent J. Fumo has helped provide money to a series of nonprofit organizations. At least five of those groups have received subpoenas this year from federal prosecutors as part of an investigation into Fumo's activities. The five are: * The Independence Seaport Museum. A board member for two decades, Fumo has backed state grants for the private museum at Penn's Landing. * Citizens Alliance for Better Neighborhoods. In two negotiations in 1998 and 2000, Fumo arranged for Peco Energy Co. to donate $17 million to this South Philadelphia group. Fumo aides run Citizens Alliance, which cleans streets, plows snow, runs a parking lot, supports charter schools, and is working to spruce up the Passyunk Avenue business strip. The senator also helped Citizens Alliance obtain about $10 million that originated with the Delaware River Port Authority. * Jefferson Square Community Development Corp. In the spring, the group sold 93 new mid-income homes it is building in a deteriorated section of South Philadelphia. Fumo has helped steer state money to the project, run by a housing consultant on Fumo's legislative payroll. * Spring Garden Community Development Corp. This group, led by a Fumo aide, has received state grants with the senator's support. Spring Garden CDC runs a parking lot, rehabs public housing, and supports a community garden. * The Delaware Valley Regional Economic Development Fund. In 1998, as part of another settlement with Fumo, Peco agreed to gradually give $11 million to the fund, controlled by aides and allies of the senator. The nonprofit has used the money to give grants and loans to other groups, some with close ties to the senator. A Fumo aide also has helped direct another nonprofit, the Fund for Pennsylvania, which has passed state grants and other funding to community groups. | |